04 Jun Cybersecurity sector continues to heat up
The Washington Post | By: Aaron Gregg | June 2, 2019
The Washington area has long been a hotbed for cybersecurity talent, owing to a quiet but influential community of hackers, network specialists and software experts serving the U.S. government agencies waging cyberwarfare. That talent base has become the backbone of a fast-growing local industry focused on corporate cyberdefense, which has produced influential local companies including Mandiant, Sourcefire and Tenable.
In the past week, that industry has seen a boost.
Milpitas, Calif.-based cybersecurity giant FireEye announced Tuesday that it paid $250 million to acquire McLean-based cybersecurity company Verodin. Two days later, Reston-based security provider TruShield Security Solutions announced it has been acquired by a private equity firm and merged with two other companies.
Both businesses are capitalizing on a massive national shortage of cybersecurity professionals, and a growing demand for cyberdefense services across nearly every industry.
“There is no end in sight to the onslaught of cyberattacks organizations face,” TruShield founder Paul Caiazzo said in a news release. “Most are unable to hire and retain security experts or bring together the right suite of tools and as a result are unprepared to defend themselves. Solving these critical risks for our customers is what drives us.”
The company is known as a managed security service provider, which means it helps organizations automate and manage the morass of anti-virus and cyberdefense products they use to keep out hackers. Companies with the best defenses employ dozens of cybersecurity solutions including threat monitoring alerts, data encryption programs and firewalls of all sorts, all of it commanded by a team of techies known as the “security operations center.” Those teams are almost always short-staffed and looking for products to make their jobs easier.
TruShield was acquired by Sunstone Partners, a private equity company. It is to be combined with similar businesses — Terra Verde of Phoenix and Sword & Shield Enterprise Security of Knoxville, Tenn. — to form a new company called Avertium. By putting together the three firms’ existing customers, the combined company already boasts a base of more than 1,000 customers across numerous industries, including retail, health care, hospitality, financial services and manufacturing.
Verodin, the company purchased by FireEye, works to solve a similar problem. Verodin’s specialty is validating the effectiveness of cybersecurity controls, using a software program to spot gaps in an organization’s cyberdefense arsenal.
FireEye said the company is expected to add approximately $20 million to billings this year and an additional $70 million in 2020.
The local industry has been spurred on in recent years by a growing community of angel investors looking to give entrepreneurs their first capital. Several of them — Virginia’s Blu Venture Investors, plus DataTribe and Gula Tech Adventures in Maryland, to name a few — were started by longtime entrepreneurs from the local tech industry.
A steady stream of new start-ups is raising funding as well.
In late February, a Columbia, Md.-based company called Bandura announced $10 million in new funding from a group of investors. DataTribe, a technology incubator known for building companies around National Security Agency-trained technologists, recently shepherded a start-up through to its first major investment round.
Prevailion, a cyberdefense start-up with ties to Texas and Maryland that is part of the DataTribe incubator, recently inked a $10 million round of funding with a group of investors that includes the West Coast venture capital firm AllegisCyber Capital, according to two people familiar with the deal.
Mike Janke, a local cybersecurity investor who founded the encryption company Silent Circle and now runs DataTribe, said the Washington region demonstrates “continual data points that show why it is the world’s top cybersecurity innovation hub.” He added: “This area has moved from marketing noise to real proof points of industry-leading IPOs, acquisitions and fundings. . . . These are the real biomarkers of a commercial innovation.”
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